Tesla $TSLA Third Quarter Earnings Guide:
We already know Tesla delivered 486,532 electric vehicles in the third quarter, and analysts have quickly built their earnings forecasts around that figure. While the details matter, the bigger picture is more important—everyone recognizes that Cybercab and robotaxi are the main drivers of Tesla’s value. Both short- and long-term investors are active in the stock. With that in mind, here are three things that short-, medium-, and long-term investors should watch for in the earnings report.
Short-term investors will look at gross margins
We’ve been here before. The second-quarter delivery numbers were significantly ahead of expectations, only for the stock to correct on earnings as gross margins disappointed. The issue in the second quarter boiled down to rising costs and what Tesla’s management calls “subvention costs.”
Quoting from CFO Vaibhav Taneja on the second quarter earnings call: “Note that interest rate subvention costs are recognized upfront as revenue offset. So as interest rates have risen this year, the cost of subvention has risen along with them, which had a negative impact on automotive margins.”In other words, the financial incentives that Tesla gave (favorable financing) ate into its gross margin, and as interest rates rose, those incentives became more expensive.
There is another factor to consider. At the end of the first quarter, Tesla had higher inventory and may have needed to boost sales by offering more incentives than usual in the second quarter. The question is whether this continued into the third quarter, or if the lower inventory at the end of the second and third quarters meant that incentives were less generous.
Wall Street has a slight sequential decline penciled in (from 17.55% to 17.27%), but it might be wrong. It all boils down to a simple assumption: automotive gross margin ex credit up equals Tesla stock up post results, and vice versa.
Tesla | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026Est |
Tesla Automotive Gross Margin ex-credits | 14.07% | 16.27% | 16.38% | 19.31% | 20.62% | 17.55% | 17.27% |
Global vehicle inventory (days of supply) | 22 | 24 | 10 | 15 | 27 | 15 | 11 |
Data source: Visible Alpha consensus estimates.
Medium Term Investors Will Look at Capital spending plans
In the fourth quarter 2025 earnings call in January, capital spending plans for 2026 were more than $20 billion. Fast forward to the first-quarter earnings call in April, and it’s over $25 billion. Fast-forward to the second-quarter call in July, and it’s still more than $25 billion, but “CapEx will grow for the next 2 or 3 years as we expand our robotaxi fleet, expand our production capacity for Optimus, make investments for a semiconductor fab, install solar manufacturing capacity and AI compute infrastructure, in addition to all the other expansions we’ll do for other manufacturing for automotive,” according to Taneja.
In other words, there’s a trend of pulling forward capital spending while recurring revenue and cash flow from Cybercab/robotaxi get pushed out by the delayed operational ramp.
Medium-term investors will watch management’s commentary, especially as Tesla just lined up $30 billion in credit that could fund more capital spending in the absence of free cash flow growth.
Long-Term Investors Are Focusing on The Cybercab rollout
Instead of social media’s fixation on monitoring every single Cybercab or robotaxi deployed in Tesla’s fleet, the real key to the Cybercab/robotaxi is the development of the next major upgrade to Tesla’s full self-driving software, v15. CEO Elon Musk’s last comment on the matter suggested it would be validated and released either in late 2026 or early 2027.
Meanwhile, management has said the robotaxi fleet is running on an early version of v15. For long-term investors who understand that perfecting a Cybercab/robotaxi model, in terms of hardware/software, operations, and safety, and then scaling it, is the key, it’s essential that management updates on v15. Any delay and the stock could be punished.
We already know Tesla delivered 486,532 electric vehicles in the third quarter, and analysts have quickly built their earnings forecasts around that figure. While the details matter, the bigger picture is more important—everyone recognizes that Cybercab and robotaxi are the main drivers of Tesla’s value. Both short- and long-term investors are active in the stock. With that in mind, here are three things that short-, medium-, and long-term investors should watch for in the earnings report.
Short-term investors will look at gross margins
We’ve been here before. The second-quarter delivery numbers were significantly ahead of expectations, only for the stock to correct on earnings as gross margins disappointed. The issue in the second quarter boiled down to rising costs and what Tesla’s management calls “subvention costs.”
Quoting from CFO Vaibhav Taneja on the second quarter earnings call: “Note that interest rate subvention costs are recognized upfront as revenue offset. So as interest rates have risen this year, the cost of subvention has risen along with them, which had a negative impact on automotive margins.”In other words, the financial incentives that Tesla gave (favorable financing) ate into its gross margin, and as interest rates rose, those incentives became more expensive.
There is another factor to consider. At the end of the first quarter, Tesla had higher inventory and may have needed to boost sales by offering more incentives than usual in the second quarter. The question is whether this continued into the third quarter, or whether lower inventory at the end of the second and third quarters meant less generous incentives.
Wall Street has penciled in a slight sequential decline (from 17.55% to 17.27%), but it might be wrong. It all boils down to a simple assumption: automotive gross margin ex credit up equals Tesla stock up post results, and vice versa.
Tesla | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026Est |
Tesla Automotive Gross Margin ex-credits | 14.07% | 16.27% | 16.38% | 19.31% | 20.62% | 17.55% | 17.27% |
Global vehicle inventory (days of supply) | 22 | 24 | 10 | 15 | 27 | 15 | 11 |
Data source: Visible Alpha consensus estimates.
Capital spending plans
In the fourth-quarter 2025 earnings call in January, capital spending plans for 2026 were more than $20 billion. Fast forward to the first-quarter earnings call in April, and it’s over $25 billion. Fast-forward to the second-quarter call in July, and it’s still more than $25 billion, but “CapEx will grow for the next 2 or 3 years as we expand our robotaxi fleet, expand our production capacity for Optimus, make investments for a semiconductor fab, install solar manufacturing capacity and AI compute infrastructure, in addition to all the other expansions we’ll do for other manufacturing for automotive,” according to Taneja.
In other words, there’s a trend of pulling forward capital spending while recurring revenue and cash flow from Cybercab/robotaxi get pushed out by the delayed operational ramp.
Medium-term investors will watch management’s commentary, especially as Tesla just lined up $30 billion in credit that could fund more capital spending without free cash flow growth.
Cybercab rollout
Instead of social media’s fixation on monitoring every Cybercab or robotaxi deployed in Tesla’s fleet, the real key to the Cybercab/robotaxi is the next major upgrade to Tesla’s full self-driving software, v15. CEO Elon Musk’s last comment suggested it would be validated and released either in late 2026 or early 2027.
Meanwhile, management has said the robotaxi fleet is running on an early version of v15.
For long-term investors who understand that perfecting a Cybercab/robotaxi model, in terms of hardware/software, operations, and safety, and then scaling it, is the key, it’s essential that management updates on v15. Any delay could punish the stock.
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